2019-07-04T22:07:21+03:00[Europe/Moscow] en true Default Risk, Mortgage-backed security, Nominal Interest Rate, Real interest rate, The supply of loanable funds, Bank rate, Chartered Bank, Currency drain ratio, Demand for money, Desired Reserve Ratio, M1, M2, Means of Payment, Monetary Base, Money Multiplier, Reserves, Velocity of Circulation, Arbitrage, Balance of Payments Accounts, Official Reserves, Capital and Financial Account, Crawling Peg, Creditor Nation, Current Account, Fixed Exchange Rate, Flexible Exchange Rate, Sector Balance, Interest Rate Parity, Purchasing Power Parity, Private Sector Balance flashcards


  • Default Risk
    The risk that a borrower, also known as a creditor, might not repay a loan.
  • Mortgage-backed security
    A type of bond that entitles its holder to the income from a package of mortgages.
  • Nominal Interest Rate
    the # of dollars that a borrower pays and a lender receives in interest in a year expressed as a percentage of the # of dollars borrowed and lent.
  • Real interest rate
    The nominal interest rate adjusted to remove the effects of inflation on the buying power of money. It is approx. equal to the nominal interest rate minus the inflation rate.
  • The supply of loanable funds
    The relationship between the quantity of loanable funds supplied and the real interest rate when all other influences on lending plans remain the same.
  • Bank rate
    The interest rate that the BOC charges big banks on loans.
  • Chartered Bank
    A private firm, chartered under the bank act of 1991 to receive deposits and make loans.
  • Currency drain ratio
    The ratio of currency to deposits.
  • Demand for money
    The relationship between the quantity of real money demanded and the nominal interest rate when all other influences on the amount of money that people with to hold remain the same.
  • Desired Reserve Ratio
    The ratio of reserves to deposits that banks plan to hold.
  • M1
    A measure of money that consists of currency held by individuals and businesses plus chequable deposits owned by individualsand businesses.
  • M2
    A measure of money that consists of M1 plus all other depositis-non-chequable deposits and fixed term deposits.
  • Means of Payment
    A method of settling debt.
  • Monetary Base
    The sum of BOC notes, coins, and depository institution deposits at the BOC.
  • Money Multiplier
    The ratio of change in the quantity of money to the change in the monetary base.
  • Reserves
    A banks reserves consist of notes and coins in its vaults plus its deposit at the BOC.
  • Velocity of Circulation
    The average # of times a dollar of money is used annually to buy the goods & services that make up GDP.
  • Arbitrage
    The practice of seeking profit by buying in one market and selling for a higher price in another market.
  • Balance of Payments Accounts
    A countries record of international trading, borrowing, and lending.Canadian Interest Rate differential: The Canadian interest rate minus the foreign interest rate.
  • Official Reserves
    The Canadian govt.s holdings of foreign currency.
  • Capital and Financial Account
    A record of foreign investment in a country minus it’s investment abroad.
  • Crawling Peg
    An exchange rate that follows a path determined by a decision of the govt. or the central bank and is achieved in a similar way to a fixed exchange rate.
  • Creditor Nation
    A country that during its entire history has invested more in the world than other countries have invested in it.
  • Current Account
    A record of receipts from exports of goods and services, net interest income paid aborad, and net transfers received fromabroad.
  • Fixed Exchange Rate
    Determined by govt. or central bank, and is achieved by central bank intervention in the foreign exchange market to block the unregulated forces of demand and supply.
  • Flexible Exchange Rate
    determined by supply & demand, no direct intervention.Govt.
  • Sector Balance
    An amount equal to net taxes minus govt. expenditure on goods and services.
  • Interest Rate Parity
    A situation in which the rates of return on assets in different currencies are equal.
  • Purchasing Power Parity
    prices of two countries are equal @ exchange R.
  • Private Sector Balance
    Saving minus Investment.